EXC3613 Risk Management with derivatives Geir Høidal Bjønnes geir.bjonnes@bi.no 1 Introduction • Learning objectives: 1. 2. 3. 4. What is a derivative? What is the role of Derivatives and Derivatives Markets Firms’ risk exposures Hedging price risk with derivatives • McDonald: Chapter 1 2 Example • Consider a farmer that grows wheat and is expecting to yield 10‚000 bushels of crop in 3 months. He is afraid that the price of wheat might drop at the period
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Questions for the Merck Case Create a decision tree for Merck. The 2 leftmost branches would identify the alternatives related to licensing Davarink (specifically license versus not to license). Next‚ if Merck decides to pursue license‚ they go into phase I which results in a success‚ or failure. Phase I success is followed by phase II where Merck has the opportunity to develop the drug to treat depression alone‚ weight loss alone‚ or both‚ or contemplate phase II failure. Finally phase
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Question 4a The currency regime adopted by China is neither fixed nor flexible exchange rate system. China has announced in 2005 the “end of its firm peg against the dollar‚ instead allowing it to trade within a narrow band against a basket of currencies.” China regime is managed floating system where the currency increases very slowly year by year and the China government prevent the currency from changing quickly in the short term. The reason why Chinese government intervene in the currency
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BUSINESS POLICY SPRING TERM 2012 BUS 450 Questions for the Next Several Cases Friday‚ February 24 Case: Competition among NA Warehouse Clubs (case 4 in text) 1. What is competition like in the North American wholesale club industry? Which of the five competitive forces is strongest and why? Use the information in Figures 3.4‚ 3.5‚ 3.6‚ 3.7‚ and 3.8 (and the related chapter discussions on pp. 57-70) to do a complete five-forces analysis of competition in the North American
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Bellagio Questions Name: Sam Clark Bellagio Questions 1. Focus on three key roles at mainly three levels of authority in the casino—blackjack dealers‚ pit bosses‚ and the vice president of table games. How would you characterize the “control strategy” (e.g.‚ tight vs. loose) used over each of these roles? 2. Prepare a list of the controls described in the case. What control problems are they designed to address? Are the managers interviewed for the case justified in being proud of their
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Risk This assignment will critically evaluate theories of risk‚ and consider the approaches to practice for the role of a local authority social worker in the identification‚ assessment and management of risk of social work with children‚ young people and families. There will be consideration given to the impact of social work practice on service users and carers including my understanding of anti-discriminatory and anti-oppressive practice. The idiom ‘damned if you do and damned if you don’t’
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BANC ONE CORPORATION An Analysis of their Hedging Strategy By Mark Glitto‚ Gajendra Tulsian‚ Robert Young University of Florida Summer 1997 INTRODUCTION In 1993 the stock price of Banc One Corporation had dropped from about $45 at the beginning of the year to approximately $35 at the end of the year: roughly a 20% fall. This sharp decline in stock price greatly bothered John B. McCoy‚ chairman and CEO of Banc One Corporation. A high stock price was essential for Bank One’s strategic goal
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Ch. 3 Study Questions 1. Discuss the rationale for the economic regulations of transportation The reason for the economic regulations of transportation is to create the monopolistic industry into a more competitive one where prices will be more reasonable for the consumer as transportation is very important to the movement of everyday goods. The government in turn will determine if a firm can enter an industry; determine which market(s) a firm can serve in that industry; and determine the prices
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Risk is part of life : I face countless danger everyday driving to work. sure I can try minimize many of them through my own driving behavior . but I can’t prevent motorist behind me who is talking on his mobile from rear-ending me while I’m waiting at a stoplight. As much as we would have it otherwise‚ risk is part of life. Some risks can be averted by steering clear of them. Many are‚ however‚ unavoidable. False sense of security Sometimes you can insure yourself against the consequences of risks
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Risk Paper 2 Project Risk Management- Professor Hurst Fluidity in Risk Planning – A Case Study One of the most important steps within a project is risk management because it plans for and responds to risks that impact the overall project deliverables including budget and timeframe. Risk management is used to mitigate risk in ways that align with each individual risk and its potential impact. During the risk management process risks are identified and defined and a plan to control‚ monitor and
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